A 3-judge bench of the Supreme Court, consisting of Justices Dr Dhananjaya Y. Chandrachud, Indu Malhotra and Indira Banerjee, has ruled in the judgment of the case – DLF Home Developers Ltd.(Earlier known as DLF Universal Ltd.) and Another v. Capital Greens Flat buyers Association Etc.Etc., delivered on December 14, 2020, that the flat buyers are entitled to payment on account of delayed compensation for delay in delivery of flat by the builder to the purchaser of flat.
The Apex-Court has pointed out that on the compensation for delay in handing over of possession, it is guided by the principles which have been formulated in its judgment of the case –Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghvan (2019) 5 SCC 725, delivered by Justice Indu Malhotra. This judgment was cited in the SC judgment of the case – Wing Commander Arifur Rahman Khan and Aleya Sultana and Others v. DLF Southern Homes Pvt. Ltd. and Others (Civil Appeal No. 6239/2019 decided .on August 24, 2020).
The fact that the developer offered an exit option with interest at nine pc would not disentitle the flat purchasers from claiming compensation. For a genuine flat buyer, who has booked an apartment in the project not as an investor or financier, but for the purpose of purchasing a family home, a mere offer of refund, would not detract from the entitlement to claim compensation. A genuine flat buyer wants a roof over his head.
The developer cannot assert that a buyer who continues to remain committed to the agreement for purchase of the flat must forsake recourse to a claim for compensation occasioned by the delay of the developer. Mere refund of consideration together with interest would not provide a just recompense to a genuine flat buyer, who desires possession and remains committed to the project.
It was for each buyer, either to accept the offer of the developer or to continue with the agreement for purchase of the flat. Similar is the position in regard to the submission on the appreciation of the value of the flats. Undoubtedly, this is one factor which has to be borne in mind in considering whether and, if so to what extent compensation for delay should be awarded.
It is true that in this case, the contractual rate of Rs ten per sq. foot per month is double the rate fixed in the agreements in the Wing Commander’s decision. On the other hand the Court must be conscious of the fact that the situation in the real estate market in Delhi is very distinct from that in Bengaluru both in terms of rentals and land values. This has not been disputed.
The flat buyers had to suffer on account of a substantial delay on the part of the appellants. In situation, they cannot be constrained to the compensation of Rs ten per sq. foot provided by the agreements for flat purchase. However, having regard to all the facts and circumstances, the Court’s view has been that the compensation on account of delay should be brought down from 7 pc to 6 pc. Moreover, the amount, if any, which has been paid in terms of the contractual rate shall be adjusted while computing the balance due and payable in terms of this judgment. ( In the Wing Commander’s decision, compensation at 6 pc was ordered to be paid in addition to the contractual rate since the amenities agreed to be provided by the developer had not been set up).
Insofar as the parking and club charges are concerned, in view of the Court’s decision in the Wing Commander’s case, the direction of the National Consumer Disputes Redressal Commission (NCDRC) in that regard has been set aside by the Apex-Court.
The appeals in this case arose from a judgment of the National Commission (NCDRC) delivered on January 3, 2020 in a batch of consumer complaints. The complaints were instituted by the respondent-Association and by individual flat purchasers against the appellant. The gist of their grievance was that there was a substantial delay on the part of the developer in handing over possession of the apartments, which were contracted to be sold. The complainants also specifically challenged the recovery of parking and club charges by the developer. A claim for compensation for delay in handing over possession of the flats was made.
At the outset, in the judgment, the SC has dealt with the force majeure defence. The NCDRC has carefully evaluated the basis on which the defence was setup and has come to the conclusion that there is no cogent evidence in regard to the nature of the delay and the reasons for the delay in the approval of the building plans.
Quite apart from this finding of fact, it is evident that a delay in the approval of building plans is a normal incident of a construction project. A developer in the position of the appellant would be conscious of these delays and cannot set this up as a defence to a claim for compensation where a delay has been occasioned beyond the contractually agreed period for handing over possession of flats. There was also failure on the part of the developer to follow safety instructions..This is a pure finding of fact. There is no error of law or fact. There is no substance in the force majeure defence.
The Supreme Court has made it clear that the directions of the NCDRC have been upheld save and except for reducing the compensation for delaying handing over flats from 7 pc to 6 pc and also declaring that the NCDRC’s direction for the refund of parking and club charges has been set aside. The Order has to be complied within two months from the date of the judgment.
Through the interlocutory applications the Court was informed that settlements have been entered into with two sets of flat buyers. In view of these settlements, the SC has ordered that these two sets of flat buyers- Sharad Mittal; and Chetali Goyal and Deepak Goyal shall be treated as proforma respondents. They shall be governed by their own settlements.
